Many international firms eyeing Pakistan as major investment destination: Bruno

Karachi: Pakistan is becoming attractive investment destination on the radar of almost all international companies due to prevailing huge potential which is not being fully harnessed due to political uncertainty and negative perception, said senior officials of Overseas Investors Chamber of Commerce and Industry (OICCI), an umbrella of foreign investors in Pakistan.

Bruno Olierhoek, President, OICCI along with M Abdul Aleem, Chief Executive/Secretary General talking to business journalists here on Tuesday said that Pakistan was operating at its 20-25 percent of potential despite huge prevailing potential.

Foreign investors want consistency and continuation of policies, Bruno said adding “Transparency and implementation of policies are main concerns of foreign investors. Investors, interested in making large investment in green field facilities ask for predictable, consistent and transparent policy”.

Pakistan offers good incentive for foreign investors but despite improvement in security situation the country is not able to attract large FDI, which is currently well below the potential of the country. The foreign investors, who are OICCI members, understand the environment and keep re-investing in Pakistan in large sums. To give you a perspective, during the past five years OICCI members have invested over $7.7 billion, whereas the total FDI in the country during those five years was $8.6 billion.

The officials said OICCI recently conducted a survey about business confidence and perception and security indicates positive business and investment sentiments and opportunities.

They observed that the uncertain political landscape of the country was the main hurdle in the way of inflow of foreign investment despite overall positive perception. “The energy and security improvements have boosted confidence while sustained growth provides incentive for investment”., Abdul Aleem noted.

Recommending taxation measures, the officials said that effective corporate income tax rate should be 25 percent and all Sales Tax rate of different jurisdiction should be reduced to 13 percent, and all other direct taxes on income should be eliminated. They also called for eliminating 3-4% super tax as per promise made initially.

Withholding tax regime should be reduced and simplified both in terms of reducing the 55 categories of withholding taxes and the rate thereon. “Incentive for investment be made attractive and feedback of the largest tax contributors taken before finalization of fiscal measures”, Bruno said.

They lamented that the OICCI members contribute Rs 4 billion per day but their refunds of only Rs 47 billion are not being paid. “The companies have to report back to their head offices which gives bad impression to the reputation of the country”, Aleem observed demanding payable schedule of refunds.

The officials of OICCI noted that Intellectual Property Rights IPR are not duly monitored and fully protected in Pakistan and this is a great concern for potential FDI. Pakistan has a very good law but its implementation is lukewarm and the Regulatory body needs to up the monitoring and implementation on serious level.

Provincial governments have not yet taken a proactive role, post 18th amendment, in promoting investment and business, they observed with concern.

The OICCI is a body of 200 members, representing nearly all the largest foreign investors in Pakistan, who come from 35 different countries and operate in 14 different sectors of trade and industry. The platform is functioning as a facilitator to foreign investors, OICCI plays a vital role on several fronts and the Chamber is frequently called upon to assist the government in policy formulation in the financial, commercial and industrial sectors, particularly where it impacts foreign investment.

OICCI members contribute, annually, over one third of the revenue collections in the country by the federal and provincial revenue authorities and invest over $2 billion annually in new capital expenditure.